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News Release

Singapore

JLL’s perspective: JTC 1st quarter 2016


Singapore, 28 April 2016

Led by multi-user factory space, industrial rents posted steepest quarterly fall since softening in 2014

JTC's statistics showed that Singapore's all-industrial rental index fell 2.7 per cent quarter-on-quarter (q-o-q) in 1Q16.  This is the steepest quarterly fall since rents started to weaken in 2014.

Rental declines were broad-based with multiple-user factories taking the lead, posting a 3.7 per cent q-o-q fall.  The industrial property market is certainly feeling the pressure of the protracted manufacturing downturn that has led to sluggish demand particularly for multi-user factory space.  According to JTC's statistics, multi-user space completed in 2015 is only registering occupancy rate of 32.1 per cent as of the end of March 2016, while those completed in 1Q16 is only 0.4 per cent occupied.

Competition for tenants will only grow more intense with a further 490,000 sqm of multi-user space expected to come on-stream in the remaining three quarters of 2016.  The downward pressure on rents for multi-user factory space will continue to intensify for the rest of 2016.​​​

Business Park clusters targeting innovation and automation industries foreseen to outperform the general market​

The Business Park segment was not spared from the rental decline in 1Q16, with rents easing by 1 per cent q-o-q.  This mirrors JLL's research which showed that the average gross rents for Business Park space edged down by 1.1 per cent q-o-q in 1Q16 to SGD3.77 psf as of end-March 2016. 

The ongoing economic woes have impeded market confidence.  Among the drivers of Business Parks, financial institutions are largely seen to be putting on hold business expansion plans with many currently undergoing consolidation.  Against this backdrop, leasing activity within Business Parks was subdued in 1Q16, with deals dominated by renewals.  Few were secured for expansion.

Said Tay Huey Ying, Head of Research for Singapore: "2016 will see another year of strong completion while demand for business park space is foreseen to stay dampened due to headwinds from the weak global economic environment as well as restructuring pains the local economy is undergoing to stay ahead.  New developments for lease completing in 2016 are foreseen to register weak pre-commitment levels on the back of an expected muted leasing market given the grim economic outlook.  However, rents for business parks targeting clusters earmarked by the Government such as those pursuing innovation and automation are expected to be more resilient and outperform the general market."​​​

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